The Chancellor of the Exchequer, Rishi Sunak, delivered his Spring Statement on Wednesday 23 March 2022.  Here is a summary of the key points:
 
National Insurance Contributions (NICs)
 
The proposed 1.25% increase in NICs payable by employees, employers and the self-employed, will go ahead as planned from April 2022, to provide additional funds for health and social care. 

Increase in the starting NIC threshold for individuals

The annual level at which employees and the self-employed start to pay NICs was due to increase from £9,568 to £9,880 from 6 April 2022.

This increase will go ahead but be further uplifted to £12,570 from 6 July 2022, effectively aligning the point at which an individual starts to pay NICs with the £12,570 income tax personal allowance.

The starting NIC threshold for the self-employed and company directors is computed on an annual basis and so will be set at a pro-rata sum of £11,908 for the whole of the tax year to 5 April 2023, before increasing to £12,570 in the tax year to 5 April 2024.

Class 2 NIC liabilities for the self-employed

For the self-employed, some individuals will find that they no longer need to pay Class 2 NICs from April 2022. The small profits threshold will be set at £6,725 as planned but the requirement to pay Class 2 NIC will only apply to those with self-employed profits over £11,908.

From 6 April 2023, Class 2 NIC will only be payable by those with profits over £12,570.

Employer NIC

No changes have been made to the annual level at which employers’ NIC start to apply; namely £9,100 for most employees in the tax year to 5 April 2023.

However, the Employment Allowance, which allows eligible businesses to reduce their employer NIC cost, will increase from £4,000 to £5,000 for the tax year to 5 April 2023.


Income Tax

The Chancellor has committed to reduce the basic rate of income tax from 20% to 19%, from 6 April 2024.
 
Note that Scotland and Wales have the right to set their own income tax rates on earned income.
 
Business Tax Relief for Capital Investment

In preparation for the 130% ‘super-deduction’ for companies coming to an end on 31 March 2023, other alternatives are being considered in an attempt to continue encouraging investment from April 2023.
 
Fuel Duty 

Fuel duty has been cut by 5p per litre for 12 months from 6pm on 23 March 2022.
The Treasury report that this will save the average car driver £100 a year and the average van driver £200 a year.

Household Support Fund

The Household Support Fund will be doubled to £1billion from April 2022. The Fund will help households with the cost of essentials such as food, clothing and utilities.

Green Technology

Green technology, including solar panels and heat pumps, will be exempt from business rates in England from April 2022, a year earlier than originally planned.

VAT on Energy Saving Materials (ESMs) installed in residential accommodation will be reduced from 5% to 0% from this April in Great Britain. The measure will be introduced in Northern Ireland in due course. The 0% rate will apply until 31 March 2027.

A 100% relief for eligible low-carbon heat networks which have their own rates bill will also be available.

VAT Rates in the Leisure and Hospitality Sector

No extension has been granted to the leisure and hospitality sector for use of the reduced 12.5% VAT rate on eligible supplies including food, non-alcoholic beverages and hotel and holiday accommodation. The VAT rate applied to these supplies will revert to 20% from 1 April 2022 as planned.

Research and Development (R&D)

The R&D tax relief schemes for companies will be enhanced from April 2023, more details will be announced this summer, with the aim of boosting sectors where the UK is a world-leader, including artificial intelligence, robotics, manufacturing, and design.
 
Any questions?
 
Please get in touch if you’d like more information on how these changes may affect you.
 
Internet link: GOV.UK